Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
SSttrraatteeggiicc SSeerrvviicceess M
Maannaaggeem
meenntt aanndd PPeerrffoorrm
maannccee ooff A
Aiirrtteell
M
Muunnnnaa LLaall
1122666688330055 ((G
Grroouupp LLeeaaddeerr))
M
Muurrtthhyy A
Annbbuusseellvvaann
1122666655990033
LLii C
Cuunnjjuuee
1122666622446633
M
Miirr H
Huum
maatthh M
Moohhiiddeeeenn
1122666699880066
Acknowledgement
We take a great pleasure in acknowledging the effort of all those people who enormously helped
us in the preparation of this report on Bharti Airtel. We are thankful to Professor Darren LeeRoss and Dr. Maathai K. Mathiyazhagan, faculties at James Cook University, who provided us
the opportunity to undertake this project and showed the confidence in us.
We are thankful to all the friends and classmates who provided us useful suggestions. We would
like to take this opportunity to acknowledge the remarkable contribution of our faculty in-charge
Dr. Maathai K. Mathiyazhagan who not only provided the practical aspects of this subject but
also explained the topics in the best possible manner. Despite being very busy he made himself
available to us whenever we needed and guided us at every step of this report.
With Thanks,
On behalf of the group
Munna Lal (Group Leader)
Table of Contents
Introduction .................................................................................................................................... 4
Bharti Group An Overview .......................................................................................................... 6
Industry Analysis ............................................................................................................................ 7
Micro Environment - An analysis for Airtel .................................................................................. 8
Bharti Airtel Porters Five Forces ............................................................................................. 10
Airtel SWOT Analysis.................................................................................................................. 12
Organizational Behaviour ............................................................................................................. 13
Strong Leadership ......................................................................................................................... 14
Board of Directors ........................................................................................................................ 15
Human Resources Commitment ................................................................................................... 16
Performance of Airtel ................................................................................................................... 17
Recommendations ........................................................................................................................ 19
Conclusion .................................................................................................................................... 20
Bibliography ................................................................................................................................. 21
Introduction
The Bharti Airtel Limited, which is owned one-third by Singapores top phone carrier SingTel,
has created itself an international brand in the telecommunication sector and also has lot of
diverse business portfolio. The operations of Bharti Airtel are spread across 20 countries of Asia
and Africa. Bharti ranks amongst the top five telecom companies of the world in terms of
number of subscribers. Bharti Airtel has become the largest telecom company in India in last 15
years. It is the flagship company of Bharti Enterprises. Airtel is the first of its kind, private
telecom service provider with a footstep in all of the 22 telecom circles in India.
Bharti Airtel has structured its business into four strategic business units (SBUs) Mobile
Services, Airtel Telemedia Services, Enterprises Services and Digital TV Services.
The basic objective of doing this report is to analyse the environment in which Bharti is
operating, organizational behaviour of Bharti group and its impact on the performance of Airtel
over the last few years. This report analyses the strategic management steps which Airtel has
undertaken and how Airtel has become the market leader in telecommunication industry in such
a short period of time.
Airtels vision is to become most loved brand by 2015 by enriching the lives of millions of
people. Airtel wish to achieve this by creating the mission statement which is to meet the mobile
communication needs of its customers through error-free service, ground-breaking products and
services, cost effectiveness and integrated message solutions.
This report will benefit the students or business leaders to understand how a company with an
efficient strategic management process and an excellent organizational behaviour can achieve
growth. How Airtel was able to make its position stronger and become a market leader in the
presence of companies with big pocket like Tata, Reliance, Idea, etc.
A SWOT analysis of Airtel will provide us the various aspects which are related to Airtel. Airtel
has capitalized on the large population of India and also took the first mover advantage. By the
time other player realized the growth of telecommunication in India and the opportunity it
provides for growth, Airtel had become the market leader and continues to strengthen its position
in the market by diversifying into other related business and providing an excellent and reliable
customer service to its customers.
We have also performed competitive analyses of Airtel with the help of Porters five forces
model which provides an insight into the various aspects of competition for Airtel.
This report contains a study of the major external and internal factors affecting Airtel and it will
provide a
view of the company. It also provides an in-depth view of the business model of
Airtel.
We hope the presentation will be valuable to a number of students and business leaders looking
for the right mix of strategy in order to develop their business by studying the success mantra of
Bharti Airtel.
The group maintains its vision to become the finest conglomerate of India by 2020. Group has
forged some strong partnership with some of the biggest names in International business. Current
partners in telecom include IBM, Ericsson, Alcatel-Lucent, SingTel, and Nokia Siemens which
helps the group to maintain superior quality at a cheaper cost. Walmart, Axa Group, and Del
Monte are other partners for separate businesses.
Philanthropic arm of Bharti group helps the group to do something for the society by helping
underprivileged children and youth. (Group Overview, 2012)
Industry Analysis
Indian Telecom Industry
In last fifteen years, Indian telecom industry has grown at a rapid pace and considered one of the
fastest emerging and leading telecom industries across the globe. The mobile sector has seen a
rise from 10 million subscribers to 175 million in a period of 10 years spanning from 2002 to
2011. 2 major reasons for this immense growth are:
Low rate of tariffs which is coupled with falling handset prices.
Reforms and regulatory changes that have been lenient in the last 10 years.
Though there has been a consistent drop in the fixed line market, the overall (fixed and mobile)
subscribers have risen to more than 150 million by the end of 2009. In addition to this foreign
telecommunication companies are vying to enter the Indian market due to lenient telecom
reforms and huge potential. MCIT or the Ministry of Communications and Information
Technology has considered implementing aggressive plans to increase the pace of growth,
targeting 250 million subscribers by the end of 2012 and more than 500 million by the end of
2015. Rural market of India is still quite untapped and likely to see a great expansion. The 70%
population of India still live in villages and there is an unprecedented scope for growth in
telecom industry (Sahota, 2012).
The telecom industry of India is quite dominated by a small number of companies. Since there
are few competitors, every oligopolistic becomes aware of others actions. Interactivity is the
main characteristic in oligopolistic markets. This also leads to highest risk of collusion.
Therefore, we can say that The Indian Telecom Industry has an oligopolistic competitive
structure.
The companies which dominate the Indian market are BSNL, Airtel, Reliance Communication,
Vodafone, Idea, MTNL, Aircel, etc.
The main raw materials for the telecommunication industry are telecom equipment, telecom
tools, circuit breakers, electronic switches and electric conductors.
Customers
Customers have always been the central focus for Airtel. Airtel has been launching its services
and schemes keeping the customer point of view in mind. The vision of becoming the most
lovable brand in India was selected by keeping the customers in focus.
Demographic
People of all age group, income groups, gender, and occupation are the customers of Airtel and
targeted with a host of schemes.
Legal
TRAI is the central authority controlling the telecom industry in India; all the companies are
bound to follow the rules of TRAI. Airtel also has a 24/7 dedicated and efficient customer care
centre and it follows the state laws and other regulatory agencies.
Socio-Cultural
The brand Airtel is very popular and easily recognized by general public. It received an award
for the most trusted brand of 2009. The tag line express yourself also influenced in its brand
equity ((BAC), 2012).
Technology
Airtel follows the strategy focus on core and outsource the rest. Bharti Airtel has a strategic
partnership with IBM to provide the technology solutions which provide superior and world
class technology and allows Airtel to focus on customers.
Economic
The economy of India is continuously increasing with a very high GDP rate. A significant % of
this can be attributed to the booming wireless and mobile sector.
Political
Fortunately, political class of India have been very much supportive for telecom industry. Airtel
did not face much problem receiving the licences to operate at national level ((BAC), 2012).
10
11
can be safely concluded that Airtel definitely has an advantage with respect to Barriers to new
entrants ((BAC), 2012).
Airtel has widespread and very strong network across India which is the biggest strength
of Airtel.
243.336 million Customers worldwide which include 181 million customers only from
India.
Airtel also provides other telecommunication services like fixed line & broad band
connectivity.
Airtel has strategic alliances with Sony-Ericsson, Nokia, and SingTel, which means that
the Airtel has access to the most sought knowledge and pioneering technology from
various parts of the telecommunication world.
Continuous
inflow
of
knowledge
&
technology
from
other
parts
of
the
Successful diversification into other services provides Airtel customers more options and
helps Airtel to maintain stronger relationship with its customers.
Weakness
No product differentiation
Recent off-deal with MTN shows the inability of Airtel to become a global telecom
player.
Opportunities
Enhanced broadband services to customer as a result of the tie-up with Google is bound
to help it & and also provide advertising opportunities.
Exploiting the untapped rural market is another opportunity. Airtel has already taken
steps by inviting 120,000 to 160000 in the operation in villages every year.
12
Threats
Vodafone which earlier owned a 5.6% stake in Airtels business moved onto invest in its
rival Hutchinson Essar. Hence losing out its knowledge & technology to its rival.
The transition of global telecom industry may tempt Airtel to go along the acquisition
trail making the firm vulnerable in case there is another recession.
Bharti Airtel may also be a target for vision o other global telecom firm that wish to enter
the Indian market (SWOT Analysis Bharti Airtel, 2010).
Organizational Behaviour
13
quality of work life balance by employees which motivates them. (Leadership and
Organizational Behavior, 2011).
The three values of Airtel speak a great deal about the organizational behaviour of Airtel. First is
Alive, the employees of Airtel are alive to any situation and understand the customer needs. If
one had to choose a single quality of Airtel which separates it from its competitors and made
Bharti Airtel so successful in such a short period of time then this is the quality which can be
named first. Customers understand that any problem they might have with their service it will be
heard patiently, and will be resolved as soon as possible. Employees are driven by passion and
have a can-do attitude. Employees at Airtel believe that even if it cant be done they can
certainly find a way.
The second value, inclusive implies that Airtel is a champion of diversity. As India is a
multicultural country with different religions, languages, cultures; so employees have to serve a
variety of customers and this is achieved by a employees who are very diverse in nature and
adapt to customer requirements.
Third value of Airtel respectful brings it closer to its customers. Airtel believes in living the
same life as its customers by sharing their joys and pains. Employees are embedded with the
qualities of humility and honesty to achieve mutual respect.
Strong Leadership
One of the biggest strategic advantages that Airtel has and other
competitors dont have is strong leadership. Although, all the
competitors have big pockets can hire the best talent and are led by
leaders who are very successful but Sunil Bharti Mittal of Airtel
outperforms everyone. Even the Indian government recognizes his
contribution to the society and conferred him with the nations
prestigious civilian award Padma Bhushan (Chopra, 2012).
Nobody had given any chance to Airtel when Sunil began with a licence to operate a mobile
network in Delhi. Especially, the telecom industry had attracted the Indias mightiest corporate
groups which included Tata, Reliance, and the Birlas. But, initially Sunil focused on acquiring
stakes and new licences to expand Bhartis coverage nationwide, while other groups took a little
cautious approach to the business. The risk taking attitude of Sunil paid very soon to his business
and the nationwide coverage of Bharti gave it the initial competitive advantage over other rivals.
Sunil believes in taking the first mover advantage although it may involve some risks. They were
first to make the push-buttons, cordless, answering machines, and the fax machines in India.
14
Sunil realized that they didnt have the required technology, resources, and experience of a big
company so he didnt mind in building the strategic alliance with some big companies like
Vodafone, SingTel, IBM to bring the international knowledge, technology, and experience in his
business.
While a lot of business will think hundred times before going to rural areas, he still sees a lot of
opportunity in rural areas. He is also diversifying his business in retail, and financial services,
and already partnered Wal-Mart, Axa, and Del Monte Pacific.
Although, Sunil is the founder of Bharti but he does not believe in employee-owner situation.
According to him, everybody is a co-owner. He does not believe in hire-and-fire and is very soft
to his employees.
Sunil admires the management model of Tatas as they never compromise. However, he also
understands that Tatas are slow in responding to the market needs. He also appreciates the
Entrepneurship of Reliance and wants a blend of two in his management model (Chopra, 2012) .
Board of Directors
The cornerstone of the company is the board of directors. Airtel has an optimum mix of
executive, non-executive, and independent directors. The board is comprised of sixteen
members and three of the board members are founder members.
Board has members which are diverse in background, skills and experience. Some of them are
industrialist and others have worked extensively in senior management positions for reputed
global companies. The board members are selected unanimously by entire board which is further
approved by shareholders in Annual General Meeting and selection of a new board member is
the responsibility of all the board members. (Investor Relations, 2012)
15
16
Employees are valued by company and company adopts the best HR practices to take care of
employees. Company provides two Employee Stock Option Plan (ESOP) schemes to its
employees under 2001 and 2005 Employee Stock Option Policy. These schemes help to retain
the best talent and experience and also help in attracting the best talent (Bharti Airtel Annual
Report, 2012).
The ESOP scheme 2001 is implemented through a trust and when an employee exercises stock
option under this scheme, shares held in trust are transferred to employee. While, under ESOP
scheme 2005 company acquires shares from the secondary market through trust and transfer
these shares to respective employees.
Company uses programs like Business Leader Acceleration Program (BLeap) and Emerging
Leader Acceleration Program (ELeap) to prepare the top talent from middle and senior
management to take leadership role. Company also takes initiatives to improve employee
productivity and efficiency. In order to achieve this, company tries to enrich jobs, career
opportunities for its employees.
The company featured amongst the top 10 companies in Business Today Best Company to
Work for and once again achieved the 2010 Gallup Great Workplace Award. It also featured
amongst the top 4 large companies in a study of the Great Places to Work. Apart from that
Aon Hewitt survey also rated it amongst the top five companies in India. All these awards give a
lot more weightage to the commitment which Airtel put in to take care of its employees.
In the annual report of 2010-11, Sunil said that people are the strategic driver of Bharti group,
especially after entering in African continent. The endeavour has always been to promote the
local talent in overseas market. As a part of global talent management program they are
complemented by the selective induction of expat. Cross-pollination strategy is also being
implemented with the help of talent exchange program between India and Africa.
The efforts of Human Resource have paid a lot of dividend to Airtel as it has a large pool of
talented and loyal employees who have contributed significantly in the outstanding performance
of Airtel in last fifteen years.
Performance of Airtel
Success Mantra: Focus on core competencies, outsource the rest
The performance of Bharti has been a mixed one during the last few quarters. During the
4QY2012, the operating margin of company was above expectations. The profitability decreased
due to forex losses and interest expenditure. However, company has maintained its leadership
position in Indian market with increasing subscriber base.
17
The above graphs show a continuous increase in number of subscribers, revenue, EBITDA and
Book value per equity share in last 6 years. (Bharti Airtel Annual Report, 2012)
A comparison of financial reports showed that there has been a decline of 14.34% in the net
profit at Rs. 1574.30 crore for the quarter ended 31st March, 2012 as compared to Rs. 1837.90
crore for quarter ended 31st March, 2011. It is the ninth straight quarter of falling profits but it is
mainly due to the higher amortisation and interest cost made in its 3G network investments,
fluctuating rupee (Tripathy, 2012). Overall, net profit of Airtel declined by 29.6% YoY to Rs.
4259 crore from Rs. 6,047 of last year. The decline in profit can be explained due to competition
and the focus on rural market but as long as the total income and subscriber base is increasing
and looking at the past performance of Airtel we can predict that this decrease in profit should
not be a long term issue.
However, a revenue increase of 10.78% was noticed for the quarter just ended as compared to
the same quarter last year. The net income was recorded Rs. 71,451 crore which is an increase of
20% as compared to the net income Rs. 59,538 of previous year. Additionally, key performance
indicators of the industry which include minute of usage, average revenue per minute (ARPM),
18
average revenue per user (ARPU), subscriber addition show a significant improvement (Ghosh,
Airtel Results Point to Turnaround, 2012).
The following table compares the performance of Airtel in 2012 with 1996. It is quite obvious
that Airtel has grown tremendously in last 16 years.
Apart from quantitative analysis, Airtel continues to add new services which promise to show a
growth in the coming years. Recently, Airtel was first to launch 4G services in India starting
with Kolkata and Bengaluru. Massive investment has been made in 3G, 4G, and Airtel Africa
over the last couple of years.
Company is looking for revenue of $5 billion and 40 per cent EBITDA from its African business
as the restructuring for Africa is completed and hopefully FY 13 should be a normal year for
Airtel Africa (PTI, 2012).
Recommendations
1. Although Airtel is already doing all those things which seem to be right at the moment,
however, some issues need to be taken seriously which might hamper the growth of company
in future. The first area of concern is declining profit. Therefore, Airtel should take this
seriously as it may negatively affect the shareholders confident in the long term.
19
2. Secondly, Bharti Airtel seems to be getting distracted due to its African business which may
result an opportunity for competitors in India. Although African business is necessary for its
global expansion but Indian market remains the biggest and most important market for Bharti
Airtel.
3. Third area of concern is the recent recommendations put forward by Telecom Regulatory
Authority of India on spectrum auction. TRAI has recommended that a minimum base price
of Rs. 18,110.90 crore for 5 MHz of 2G spectrum in the inferior 1,800 MHz band be set for
the airwaves to be auctioned. Further, only 5MHz in blocks of 1.25MHz should be auctioned
to all eligible firms. These recommendations may increase the call rates in the country and it
will not remain viable for telecom companies to operate the business (Ghosh, Livemint,
2012). Top leadership of Bharti along with the top leaders of other players should talk to
government to find out a feasible solution.
4. Despite launching 3G services in India, Airtel has not met the expectations of its customers
and poor 3G services will affect even those customers who have been using Airtel for years.
3G and 4G services are next generation services which will see a growth in next few years.
Any competitor providing reliable service may take the advantage of first mover.
Conclusion
It is quite evident from the entire discussion that even a small start-up company with strong
leadership and excellent organizational behaviour can become a global company in a very short
period of time.
Despite all these issues mentioned above, Airtel has the resources to withstand any challenge
posed by these problems and future outlook of the company seems very positive. It can be easily
said Bharti Airtel is one company of India which gives a promise of growth in the future as well.
After creating a mobile revolution in India, Airtel hopes to play a leadership role in the wireless
revolution as well. The expansion into African continent makes it a truly global company and
successful diversification into other businesses promises about a better future for Bharti group.
All this has been achieved due to a highly motivating leadership and commitment of employees.
The future outlook of Bharti Airtel looks promising with future growth potential of 3G, 4G and
wireless sector.
20
Bibliography
(BAC), B. A. (15 March, 2012). Bharti Airtel Ltd. Fundamental Company Report. Retrieved 10 May,
2012, from Market Publisher:
http://pdf.marketpublishers.com/bac_swot/bharti_airtel_ltd_swot_analysis_bac.pdf
SWOT Analysis Bharti Airtel. (2010). Retrieved 13 May, 2012, from Marketing Research:
http://www.marketing--research.com/marketing/swot-analysis-bharti-airtel
Leadership and Organizational Behavior. (February, 2011). Retrieved 12 May, 2012, from nwlink:
http://www.nwlink.com/~donclark/leader/leadob.html
Bharti Airtel Annual Report. (May, 2012). Retrieved 13 May, 2012, from Airtel:
http://www.airtel.in/AnnualResults/Bharti_Airtel_annual_report_full_2010-2011.pdf
Group Overview. (2012). Retrieved 07 May, 2012, from Bharti:
http://www.bharti.com/wps/wcm/connect/BhartiPortal/Bharti/home/about_us/group_over
view
Investor Relations. (2012). Retrieved 13 May, 2012, from Airtel:
http://www.airtel.in/wps/wcm/connect/about+bharti+airtel/Bharti+Airtel/Investor+Relation
s/?WCM_Page.ResetAll=TRUE&CACHE=NONE&CONTENTCACHE=NONE&CONNECTORCACHE
=NONE&SRV=Page
Organization Structure. (May, 2012). Retrieved 09 May, 2012, from Airtel:
http://www.airtel.in/wps/wcm/connect/about+bharti+airtel/Bharti+Airtel/Investor+Relation
s/Company+Profile/PG_Company_Profile?countrytabs=3
Chopra, P. (2012). Corporate Management - Bettering the best. Retrieved 13 May, 2012, from
LightPositive: http://www.lifepositive.com/mind/work/corporate-management/sunilbhartimittal.asp
Ghosh, S. (02 May, 2012). Airtel Results Point to Turnaround. Retrieved 13 May, 2012, from liveming:
http://www.livemint.com/2012/05/02095018/Airtel-results-point-to-turnar.html
Ghosh, S. (03 May, 2012). Livemint. Retrieved 13 May, 2012, from livemint:
http://www.livemint.com/articles/2012/05/02221123/Telco-chiefs-ask-govt-torejec.html?atype=tp
Lingham, S. D. (2012). Introduction to International Organizational Behavior. Retrieved 13 May,
2012, from introtoob: http://www.introtoob.com/
PTI. (May, 2012). Bharti Airtel aims $5 bn revenue from Africa. Retrieved 13 May, 2012, from
Business Line: http://www.thehindubusinessline.com/industry-and-economy/infotech/article3377098.ece
Sahota, D. (02 May, 2012). Bharti Airtel sees revenues rise but profit fall. Retrieved 12 May, 2012,
from telecoms: http://www.telecoms.com/43614/bharti-airtel-sees-revenues-rise-butprofit-fall/
21
Tripathy, D. (02 May, 2012). Bharti Airtel Results. Retrieved 13 May, 2012, from Reuters:
http://in.reuters.com/article/2012/05/02/bharti-airtel-results-idINDEE84103020120502
22